Friday, May 27, 2016
Fear and Loathing in the American Labor Market
Thank you Donald and Bernie. We are facing an obvious populist revolt, particularly salient among those in the working class displaced by global outsourcing and local automation. With 70% of our labor force having faced year-to-year real buying power declines for well over two decades, that the economic performance “averages” look better (because those at the top are making so much more) is no consolation.
I’ve blogged about the contraction of our middle class and how upward economic mobility in the United States is primarily a relic of history. The once-stereotypical “man-as-breadwinner” notion is also dying in a sea of seminal socio-economic change. “As America’s wages have stagnated in recent years, men’s income has dipped. Young men, meanwhile, for the first recordable time, are more likely to live with their parents than a romantic partner, according to new data from the Pew Research Center. (Women, however, are more likely to live with a partner.).” Washington Post, May 29th.
There is also another symptomatic mobility change that has apparently further reduced the bargaining power of average workers, men and women. It goes beyond the changing gender earning roles or the demise of union power; only 6.7% of private-sector workers were unionized in 2015 according the BLS. For industries facing obvious obsolescence, I noted the stubbornness of some workers, coal miners by way of example, facing job declines for a very long time, unwilling to move to find sustainable work in other areas. There’s a trend here. Folks simply are not moving to “where the jobs are” much anymore. Why?
“[According to research by] economists at the Federal Reserve Board to be published soon by the Brookings Institution used a combination of factors — job shifts, movement in and out of the labor force, interstate migration, job creation and destruction, among others — to measure what they called fluidity or dynamism in the labor market.
“What they found was a drop of 10 to 15 percent between 1980 and 2013. Some individual measures showed starker declines: The proportion of workers who jumped from one job to another plunged by nearly a quarter.
“Mobility normally drops during downturns, and that was the case during the Great Recession. Millions of jobs vanished, and those fortunate enough to be working were less inclined to give up the one they had…
“The declining churn in the labor market may surprise those who assumed that the era of lifelong employment capped by a gold watch had given way to serial job-hopping. But the reality is more complicated, said Abigail Wozniak, an economist at the University of Notre Dame and one of the authors of [the above-referenced] report on the subject. While it is true that fewer people have very long tenures at a single company, she said, that trend has been swamped by a countervailing one: People are not moving as much out of what used to be entry-level and temporary jobs.
“Such road-testing of jobs was once very common, particularly for young workers. But now, ‘quick turnover jobs are declining across the board,’ Ms. Wozniak said. ‘It’s not as easy to try things out.’…
“But as fewer and fewer Americans are loading up the moving van in search of opportunity, that advantage may be slipping away. In recent years, economists have become increasingly worried that a slide in job turnover and relocation rates is undermining the economy’s dynamism, damping productivity and wages while making it more difficult for sidelined workers to find their way back into the labor force.
“‘It’s possible that one reason people aren’t changing jobs is because they’ve all found jobs that are great for them and they’re happy,’ Betsey Stevenson, an economist at the University of Michigan and a former member of President Obama’s Council of Economic Advisers, said. ‘But the other possibility is that people stay in jobs that aren’t as good for them because they’re terrified of changing, and that’s bad for the overall economy.’
“Staying put can mean that workers are not moving to jobs where they would be more productive. At the same time, many are forgoing the raises and ascents on the career ladder that often come with a job switch. Fewer openings can also have a ripple effect, shrinking the bargaining power of workers in general, making it tougher to ask for a bump up in pay… ‘It also stinks if you lose your job,’ Ms. Stevenson said of reduced turnover. ‘It’s like a game of musical chairs where only half the people get up.’” New York Times, May 24th.
Bottom line: too many of us in the labor force are simply scared of the future. We don’t trust that future but we don’t exactly know what to do. We hate where we are, but if we have a job, we often cling to that as if there were no other alternatives.
“One of the more intriguing findings [of the above report] was the role of declining social trust and what is known as social capital — the web of family, friends and professional contacts. For example, the proportion of people who agree with the statement, ‘Most people can be trusted,’ has been shrinking for more than three decades. Researchers found that states with larger declines in social trust also had larger declines in labor market fluidity. The lack of trust may increase the cost of job-hunting and make both employees and employers more risk-averse.
“Ms. Wozniak added that the benefits of LinkedIn and Facebook friends may not replace the personal connections that still remain the best way to find a job… For some, the information revolution has a decided downside. Employers can use easily accessible information about criminal records and credit histories, not to mention embarrassing tweets, photos, social media postings and more to screen out a wider range of candidates.” NY Times.
We are even watching as Millennials have stopped ‘”moving” remotely as much as past generations. According to the May 24th Business Insider (citing a new Pew study), “more millennials (ages 18 to 34 as defined by Pew) are living at home than in any other living arrangement. This is the first time a plurality of young adults in that age bracket have lived with their parents, rather than on their own or with a partner or roommates, in American history, according to the Pew analysis. A grand total of 32.1% of millennials are living at home.”
We are killing the real job creators, which most definitely does not include what GOP President George H.W. Bush once called the “voodoo economics” of trickledown policies including tax cuts for the rich. The real job creators? We are still cutting government funding for education, infrastructure and basic research. Failing to address this populist rebellion with more than stupidly-catchy slogans that can never work, seeking scapegoats and placing blame where it really cannot be applied will only hasten the “great unraveling” of what we currently call the United States of America.
I’m Peter Dekom, and denial and deflection never solve the problems that must be solved to sustain the country as we know it.